- The condition that occurs when a consumer fails to fulfill the obligations set out in a loan or lease.
lapse, disregard, lack, neglect, miss, failure, deficiency
Related Terms and Acronyms
- Bad Credit — Definition,
- Someone who carries a higher credit risk.
- Bad Credit Loan — Definition,
- A loan taken out by someone with bad credit.
- Credit Risk — Definition,
- The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.
- Delinquency — Definition,
- Failure to make mortgage payments when mortgage payments are due.
- Forfeiture — Definition,
- Loss of property because of violation of law or contract.
- Good Credit — Definition,
- Someone who carries little credit risk.
- Guarantee — Definition,
- An enforceable warranty on the promise of quality of a product or formal promise by one person to take responsibility for the debts or obligations of another person if that person fails to meet them.
- Guaranty — Definition,
- A promise to assume responsibility for a debt if the borrower defaults.
- Mortgage Acceleration Clause — Definition, Important,
- A provision of a loan agreement that lets a lender demand payment of the full balance under specified circumstances, such as sale of the property, default or refinancing. Not commonly used in Canada and/or Canadian lenders.
- Mortgage Disability Insurance — Definition, Important,
- Insurance that covers mortgage payments if a policyholder becomes disabled.
- Mortgage Insurance — Definition, Very Important,
➥ CanEquity offers mortgage insurance.
- Insurance that protects a lender if a homeowner fails to pay off his or her mortgage.
- A policy covering a mortgagor from which the benefits are intended (a) to pay off the balance due on a mortgage upon the death of the insured, or (b) to meet the payments on a mortgage as they fall due in the case of his death or disability.
- Non-recourse Debt — Definition,
- A loan secured by collateral where the borrower is not personally liable.
- Notice of Default (NOD) — Acronym, Important,
- The step in the foreclosure process where the lender informs the court that the borrower is in arrears.
- Power of Sale — Definition,
- The right of a mortgagee to force the sale of the property without judicial proceedings should default occur.
- Repayment Plan — Definition,
- Modification of an existing loan after the borrower has been delinquent. Often used when the borrower misses payments but the lender does not foreclose.
- Repossession — Definition,
- The taking back of property after a borrower has stopped making payments.
- Restructured Loan — Definition,
- A mortgage in which basic terms -- such as interest rate, term and monthly payment -- have been changed to prevent foreclosure. Not a normal practice in Canada.
- Sub-prime Borrower — Definition,
- A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.
- Sub-prime Mortgage — Definition, Important,
- A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.